“The dollar strengthened, long-term bond yields rose and Asian shares rose after the US Federal Reserve announced a 50 basis point rate cut.”, — write: www.epravda.com.ua
The dollar strengthened, long-term bond yields rose and Asian shares rose after the US Federal Reserve announced a 50 basis point rate cut.
This is reported by the Reuters agency.
The S&P 500 index hit a record high overnight, and although it closed slightly lower, futures rose 1% during the Asian trading day. Nasdaq futures also rose 1%.
Futures on European shares also rose by 1%, and the FTSE – by 0.8%.
Japan’s Nikkei jumped 2.3% and stock markets in Australia and Indonesia hit record highs, while expectations of stimulus in China pushed down Chinese bond yields and lifted shares in Hong Kong and mainland China.
The Fed cut the range for the key rate by 50 basis points to 4.75%-5%, which traders expected before the decision. The dollar initially fell sharply, hitting a two-year low against the pound, but then recovered sharply.
Attention now turns to the Bank of England, where inflation in the services sector has reduced the likelihood of a rate cut. Markets peg the chance of keeping the rate at 5%, with a 19% chance of a 25 basis point cut.
Elsewhere in Asia, rising expectations of policy easing pushed Chinese bond yields lower and lifted the CSI300 index by 0.7%, with real estate and spirits stocks showing the biggest gains.
The Hang Seng index in Hong Kong rose by 1.9%.
China’s yuan hit a 16-month high of 7.06 per dollar. China is expected to cut its key and lending rates on Friday, a Reuters poll showed.
MSCI’s broad index of Asia-Pacific shares outside Japan rose 1% to a three-week high.
The only negative was South Korea’s post-holiday return to a heavy sell-off in chipmaker stocks, following a pessimistic outlook from Morgan Stanley, which cut its price target for SK Hynix in half. SK Hynix shares fell 6%, while Samsung shares fell 1.6%.
The Fed’s rate cut is expected to support spending and the U.S. economy, and prompt other central banks to cut rates.
We will remind:
The US Federal Reserve (Fed) cut the key rate by 50 basis points to a target range of 4.75%-5.0% for the first time since 2020.